Paid CPC will now be a combination of your bid and the bid of the advertiser in the position beneath you. Previously, CPCs were based only on the CPC of that next advertiser. This change allows for a more predictable relationship between your bid and resulting impressions and clicks, regardless of whether or not you change ad positions.
Together, these updates mean that as you modify your Max CPC, you are more likely to see a corresponding change in impressions and CPC regardless of other advertisers' bids, and independent of whether or not you change ad positions.
You'' be better able to forecast performance, and manage bids and overall spend. And, we'll be better equipped to help you create and optimize effective bid strategies.
Why are we making these changes?
We're making these changes to improve auction dynamics and predictability so it will be easier for all of our advertisers to manage to their specific targets.
Historically, to see a change in click volume or CPC, you've had to:
- Bid higher than the advertiser in the position higher than you, or
- Bid lower than the advertiser in the position lower than you
In this scenario, it's possible that you could adjust you bid and see no change in CPC or impression volume. This means that you often have to go through multiple bid updates in order to see a change reflected in performance metrics.
For example, imagine two advertisers in the auction with the same Quality Score. Advertiser A bids $1.00. Advertiser B bids $0.50. If advertiser B bids up by $0.10 to $0.60, he or she will not have made a big enough adjustment to change her auction position or paid CPC. Following these auction updates, she would likely see a change to impressions, clicks, and CPCs based on her adjustment.
Why are you changing the auction to focus on impression share?
Determining impression share rather than ad position gives advertisers more control over impression and click volumes. Currently, the auction determines ad position, which means you bid increases are only meaningful if and when they allow you to "pass" the advertiser above or below you. Now when you adjust bids in the updated auctions, you will see corresponding changes in impressions (and thus clicks) regardless of what other advertisers are bidding.
How does this affect me?
The new auctions will be more responsive to your bid changes. You are now likely to see a change in paid CPC for every bid updates, regardless of whether or not you pass the advertiser above / below you. Your paid CPC will now be determined by your Max CPC and no longer only by other advertiser bids. Small bid changes will have a greater impact on impression share, click volume, and CPC increases or decreases. You will have more information and be better able to optimization your campaign and, ultimately, reach your ROI target.
Do I need to take any immediate actions?
There is no action required from you to benefit from this change!
Where can I find more information?
If you have any further questions, please do not hesitate to contact your account manager or email firstname.lastname@example.org.